Question 1

Consider the following statements: 1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 percent of the paid up capital 2. Foreign Direct Investment upto 49 percent from all sources is permitted in private sector banks in India under the automatic route Which of these statements is/are correct?

Accepted Answer

In India, Indian promoters can hold up to 49 percent of the paid-up capital in private sector banks. Foreign Direct Investment of up to 49 percent from all sources is allowed in private sector banks in India through the automatic route. These statements are incorrect. Additionally, the Foreign Direct Investment limit in private sector banks has been increased to 74 percent under the automatic route, which includes investment by Foreign Institutional Investors (FIIs).

Question 2

Consider the following statements: I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom. II. India's stock market has grown rapidly in the recent past even overtaking Hong Kong's at some point of time. III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard. Which of the statements given above are correct?

Accepted Answer

India's stock market has indeed shown significant growth in recent years, even surpassing Hong Kong's market at certain points. However, the statement about India accounting for a large portion of all equity option contracts traded globally is not accurate. This discrepancy makes only statements II and III correct, leading to the correct answer being (a) I and II only.

Question 3

Bank Rate implies the rate of interest:

Accepted Answer

Bank Rate is the rate at which the central bank of a country discounts bills of exchange. It is a benchmark interest rate used by the Reserve Bank of India for refinancing commercial banks.

Question 4

Consider the following: 1. Currency with the public 2. Demand deposits with banks 3. Time deposits with banks. Which of these are included in Broad Money (M3) in India?

Accepted Answer

The Broad Money (M3) in India includes Currency with the public, Demand deposits with banks, and Time deposits with banks. Therefore, the correct option is (d) 1, 2 and 3.

Question 5

Which one of the following groups of items is included in India's foreign-exchange reserves?

Accepted Answer

India's foreign exchange reserves consist of foreign currency assets, gold holdings of the Reserve Bank of India, and Special Drawing Rights (SDRs).

Money & Banking — UPSC Previous Year Questions

Year-wise Distribution

Sample Questions

Money & Banking — UPSC Previous Year Questions

Year-wise Distribution

Sample Questions